Business confidence takes a hit in UK, South West region sees six-month low By

Business confidence takes a hit in UK, South West region sees six-month low By

Business confidence in the United Kingdom has been on a downward trend, according to the latest Lloyds (LON:) Bank Business Barometer survey. The survey, conducted from September 1-15, 2023, revealed a drop in confidence levels to 36% from an 18-month high of 41% in August. This decline aligns with other indicators pointing towards a slowing economy, a concern that was underscored by the Bank of England’s decision to keep interest rates unchanged last week.

In the South West region, business confidence dropped significantly to its lowest level in six months. The regional confidence reading fell by 25 points during September to 21%. Companies reported lower confidence in their own business prospects month-on-month, down 23 points at 26%, and their optimism in the economy also fell by 27 points to 16%.

Despite this drop in confidence, businesses identified their top target areas for growth over the next six months. These include evolving their products and services (40%), investing in their teams (31%), and diversifying into new markets (21%). However, expectations for increasing staff levels over the next year dropped by 25 points to a net balance of 10%.

Lloyds Bank noted that while there was a dip in confidence this month, when compared with data from the same period last year, levels were up by 22 points. The bank’s economists suggest that businesses are feeling more upbeat following the freezing of interest rates, which could help secure a more confident outlook for the final quarter of the year.

Amanda Dorel, regional director for the South West at Lloyds Bank Commercial Banking, commented on the situation. She said businesses are looking within their operations for growth opportunities and exploring their product and service offerings as they prepare for a busy final quarter. She added that as consumer confidence improves, businesses in the region will aim to capitalize on potential increases in spending.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, also weighed in, stating that despite the uncertain economic environment with inflation and interest rate pressures, the Bank of England’s recent decision is likely to help businesses feel more upbeat about the future.

The survey also found that while pricing expectations inched higher in September, hiring intentions cooled. The proportion of companies planning to raise salaries also fell, although it remained around the average for the year. More details about Britain’s economy will be revealed when the Office for National Statistics publishes comprehensive growth data for the second quarter.

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